Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.23.1
Leases
9 Months Ended
Apr. 30, 2023
Leases [Abstract]  
Leases

Note 8 – Leases

 

The Company determines if an arrangement is or contains a lease at contract inception. The Company leases buildings, office space, patient service centers, and equipment primarily through operating leases, and equipment through a limited number of finance leases. Generally, a right-of-use asset, representing the right to use the underlying asset during the lease term, and a lease liability, representing the payment obligation arising from the lease, are recognized on the balance sheet at lease commencement based on the present value of the payment obligation. For operating leases, expense is recognized on a straight-line basis over the lease term. For finance leases, interest expense on the lease liability is recognized using the effective interest method and amortization of the right-of-use asset is recognized on a straight-line basis over the lease term. Short-term leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company primarily uses its incremental borrowing rate in determining the present value of lease payments as the Company’s leases generally do not provide an implicit rate.

 

The Company has lease agreements with (i) right-of-use asset payments and (ii) non-lease components (i.e. payments related to maintenance fees, utilities, etc.,) which have generally been combined and accounted for as a single lease component. The Company’s leases have remaining terms of less than 1 year to 6 years, some of which include options to extend the leases for up to 5 years. The Company’s lease terms may include renewal options that are reasonably certain to be exercised and early termination options that are reasonably certain not to be exercised.

 

Certain of the Company’s lease agreements include rental payments adjusted periodically for inflation or a market rate which are included in the lease liabilities.

 

Leases   Balance Sheet Classification   April 30,
2023
    July 31,
2022
 
Assets                    
Operating   Right-of-use assets   $ 13,457     $ 15,174  
Finance   Property, plant and equipment, net (a)     144       172  
Total lease assets       $ 13,601     $ 15,346  
                     
Liabilities                    
Current:                    
Operating   Current portion of operating lease liabilities   $ 3,706     $ 3,432  
Finance   Finance leases short term     57       81  
                     
Non-current:                    
Operating   Operating lease liabilities, non-current     10,734       12,729  
Finance   Other liabilities and finance leases long term    
      39  
Total lease liabilities       $ 14,497     $ 16,281  

 

(a) Accumulated amortization of finance lease assets was approximately $267 and $210 as of April 30, 2023 and July 31, 2022, respectively.

 

Components of lease cost were as follows:

 

    Three months ended
April 30,
    Nine months ended
April 30,
 
    2023     2022     2023     2022  
Operating lease cost – net (a)   $ 937     $ 1,085     $ 2,897     $ 3,372  
Finance lease cost:                                
Amortization of leased assets     19       19       57       57  
Interest on lease liabilities     1       3       4       8  
Total lease cost   $ 957     $ 1,107     $ 2,958     $ 3,437  

 

(a) Net of $126 and $252 sublease income for the three and nine months ended April 30, 2023, respectively.

 

The maturity of the Company’s lease liabilities as of April 30, 2023 is as follows:

 

Maturity of lease liabilities, years ending July 31,   Operating
leases
    Finance
leases
    Total  
2023   $ 1,137     $ 22     $ 1,159  
2024     4,254       37       4,291  
2025     3,816      
      3,816  
2026     3,431      
      3,431  
2027     2,507      
      2,507  
Thereafter     808      
      808  
Total lease payments     15,953       59       16,012  
Less: Interest (a)     (1,513 )     (2 )     (1,515 )
Present value of lease liabilities   $ 14,440     $ 57     $ 14,497  

 

(a) Primarily calculated using the Company’s incremental borrowing rate.

 

Lease term and discount rate for the nine months ended April 30 were as follows: 

 

Lease term and discount rate   2023     2022  
Weighted-average remaining lease term (years):            
Operating leases     4.0 years       5.0 years  
Finance leases     0.7 years       1.7 years  
                 
Weighted-average discount rate:                
Operating leases     5.18 %     4.97 %
Finance leases     3.31 %     5.20 %

 

See Note 4 for cash flow information on cash paid for amounts included in the measurement of lease liabilities for the three and nine months ended April 30, 2023 and 2022.